What are the factors that helped Magdeburg to create an attractive startup ecosystem? In this episode, Thorsten Terweiden, Head of the International Office for Economic Development for the City of Magdeburg, joined us to explain their effort to create a Founder City. Listen to get more insights about the ecosystem.

The city of Magdeburg is a rising star in the German Startup Ecosystem. In 2022, the city jumped three spots in StartupBlink’s Global Startup Ecosystem Index. It ranked among Germany‘s top thirty cities for startups. It is an ideal spot for startups who would like to grow in the “Semiconductor,” “Health,” “Hardware & IoT,” and “Software & Data” industries. In this blog, you can find more about what factors helped Magdeburg to build an attractive startup ecosystem and how they keep the momentum going.

Brief Background Information

There is no doubt that context affects everything. In the case of Magdeburg’s startup ecosystem, society and history are two factors that can not be underestimated for success. The city has an approximate population of 245k and is the state capital of Saxony-Anhalt, one of Germany’s 16 federal states, making it a central area for many initiatives.  Additionally, it is home to Germany’s second-biggest inland port and, therefore, one of the freight cities in Germany. Back in time, it was the center of heavy industry where equipment like heavy machinery was produced. Even today, remnants from the past make the infrastructure of Magdeburg strong. However, Magdeburg did not only rely on history and evolved itself based on the needs of today. 

City of Proximity

New challenges require new solutions. Magdeburg’s aim to attract more FDI make them invest more in infrastructure.  The city has an excellent reputation for having autobahns, train and waterway connections, making it the “City of Proximity.”  Recently, Intel announced an investment of 17 billion euros in a semiconductor mega site in Magdeburg. This was not by chance, but one crucial factor was that the selected location had all the necessary infrastructure to build a facility. Moreover, as it is the state capital, administrative works like permits are easier to administer in Magdeburg. The Development Bank of Saxony-Anhalt is headquartered in Magdeburg, making access to finance easier. Also, the state ministries and other competent authorities are based there.

Founder City

Thorsten Terweiden describes Magdeburg as the founder city for several reasons. 

Firstly, the city has two venture capital firms; IBG Beteiligungsgesellschaft Sachsen-Anhalt and Bmp ventures. These are notable VCs since they have many successful exits. Secondly, the city has an accelerator named Health + IT Campus which mainly supports Medtech projects. Co-working spaces are another excellent startup support you can find in Magdeburg. The soft factors, such as being a compact and Germany’s fourth greenest city, make it even more attractive for businesses to locate their operations in Magdeburg.

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Strengthening Relationship with China

Thorsten Terweiden states that they benchmarked Duisburg, which has a strong trade relationship with China, thanks to its inland port. In this respect, since 2008, Magdeburg has been the sister city of Harbin, where they cooperate in different fields such as tourism, education, and trade. China has an important potential for foreign direct investment in Magdeburg.

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Young Population

The city values young people and future entrepreneurs. The city’s education focuses on training future professionals for the emerging sector. A university in the city offers nanotechnology courses, and new study courses and practice labs are planned in connection with Intel’s investment. This will help prospective graduates better understand the chips’ knowledge and be potential candidates for a job at Intel. Additionally, the city is excelling in healthtech and opened up the Research Campus STIMULATE Solution Centre for Image Guided Local Therapies in the Port of Science for the use of graduates and researchers in applied sciences.

Magdeburg also attracts international students with its English-taught engineering and computer science courses. Thorsten Terweiden claims that there are approximately 5,000 international students and highlights that a significant proportion of students come from China and India. This is important because the city wants to strengthen its economic relationships with China and India.

Visibility

While emerging as the founder city, Thorsten Terweiden highlights the importance of public relations to increase visibility. The International Office is well-aware of the value social networks can bring in terms of forming synergies with other government entities around the world. Magdeburg has a great approach to increasing the visibility of its health-tech sector, and they are proud to share it with the World using its LinkedIn account. For example, recently, a Medtech delegation from Magdeburg and the city’s international economic development office attended WLOUNGE Tech Awards Gala 2022, highlighting one of the most important sectors in Magdeburg and networking with other invitees. 

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